The Reserve Bank of India's Monetary Policy Committee (MPC) decided to hold the benchmark repo rate steady at 5.25 percent during its February 2026 bi-monthly review, alongside retaining its neutral policy stance. It was the first pause after a sequence of cuts through 2025 that took the rate cumulatively 125 basis points lower, from 6.50 percent at the start of 2025 to 5.25 percent by the close of that cycle.
Why the MPC Paused
The committee judged that the 125 bps of easing already in transmission needed time to feed through to lending rates and economic activity. Governor Sanjay Malhotra noted that consumer price inflation had moderated within the 2-6 percent target band through late 2025, but flagged upside risks from food prices and global commodity volatility. The neutral stance preserved the MPC's flexibility to cut, hold, or raise depending on how the macro picture evolves.
India's GDP growth for FY26 was tracking close to earlier estimates, and the inflation glide path appeared anchored to the 4 percent medium-term target with manageable variance. The bigger questions for 2026 — global crude prices, food supply, and the rupee — were not yet pressing enough at this meeting to demand a directional shift.
Impact on Borrowers and Depositors
For existing home loan borrowers on EBLR-linked floating rates, the 2025 cuts have largely been transmitted into lower EMIs by this point — a Rs 50 lakh loan over 20 years at a typical 7.75 percent (5.25 percent repo plus 2.50 percent spread) attracts an EMI of about Rs 41,069 per month, materially below the pre-cutting-cycle level. The February hold means no further reduction in the immediate term but also no upward pressure.
Fresh borrowers should focus on negotiating spreads and processing fees rather than waiting for additional rate moves. Fixed deposit rates have settled at the new equilibrium levels around 6.50-6.70 percent at major banks for the one-year tenure. The 7-7.5 percent senior-citizen rate band is likely to persist through the next quarter unless the MPC signals a fresh move.
Looking Ahead
The April 2026 MPC meeting will be the next opportunity for a policy move. Markets will watch CPI prints, GDP estimates, and global commodity prices to gauge whether the pause becomes the new normal or a brief plateau before further direction is set.
Source
RBI Monetary Policy Statement, February 2026